Jobless Claims disappoint in the US ahead of Non Farm Payroll figures this afternoon as global risk sentiment continues to wane

USD

A dismal showing for yesterday afternoon’s US ADP Employment Change figure for May has taken the edge off global risk sentiment. Market participants have already been creating a wide berth between themselves and riskier asset classes in the early part of this week, mainly due to concerns over Spain’s fiscal position. The disappointing US labour market data coupled with yet more raised expectations of QE after US GDP for the first quarter was revised downwards, has heightened fears that this afternoon’s US Non-Farm Payroll number, traditionally the most closely-watched data release of the month, will also come in below-par. All of this, however, has added up to US Dollar strength on the day.

EUR

More doom and gloom from Spain yesterday as it emerged that circa €100bn in Capital (around 10% of GDP) had left the country during the first 3 months of this year as foreign investors sold their Spanish assets amid fears of Madrid’s ability to contain it’s twin economic and financial crisis. Having said this, the Euro found some support against the dollar and the pound, following a brief rise above 1.24 against the dollar after eurozone inflation figures released were lower than expected. It did end up 0.1% higher on the day after falling back into the 1.23 territory.

Comments from ECB President Mario Draghi yesterday, which described the current make-up of the eurozone as ‘unsustainable’, were relatively well-received by investors holding euro-denominated assets, with analysts cyting that the first signs of a dose of realism from the Eurozone leaders was seen as a positive thing.

GBP

The pound performed poorly yesterday, losing ground against all of the other sixteen most-actively traded global currencies. Sterling’s position may also be determined by this mornings release of the latest PMI manufacturing survey. predicted figures show that activity in this key sector of the UK economy will have contracted in May – if this proves to be the case, then the week could end on a sour note for the Pound. The move against the euro over the past two months appears to have run out of steam as well as it ended 0.5% lower against the single currency on the day.

JPY

The Yen strengthened significantly against every other major currency and hit its strongest level against the euro in more than 11 years. This rising pressure on yen due to haven demand has spurred speculation that Tokyo would act to weaken the currency after Jun Azumi, finance minister announced he was keeping a close eye on flows into the yen.